The 21st century may be Africa’s moment. The newly released African Economic Outlook 2019 report by the Africa Development Bank (ADB) reflects the outpouring of optimism aptly captured by the “Africa Rising” narrative.
The report showed the continent’s growth prospects remaining inspiringly steady and its industry-leading the growth. However, a growing debt burden, illicit financial flows and conflict remain stumbling blocks to the 21st century becoming “the African Century”.
The 21st century has been described as “the Asian Century” the same way the 19th century was characterised as “Britain’s Imperial Century” and the 20th century as “the American Century”. But Africa appears poised to outpace Asia in the next four decades.
Africa’s sustained growth level is set to not only continue but rise over the next four decades.
Seven years ago, the economist Charles Robertson and his co-authors predicted in their pioneering book, The Fastest Billion: The Story Behind Africa’s Economic Revolution (2012), that by 2050, the continent’s Gross Domestic Product (GDP) will equal the combined GDPs of the US and the EU at current rates.
The optimism of a continent rising is no longer confined to the African Development Bank’s African Economic Outlook report. It is also reflected in the Legatum Prosperity Index (LPI) by the London-based think-tank, the Legatum Institute, which is now preparing its 2019 Prosperity Index, the 13th in a row with a strong focus on Africa.
The World Bank also projects an average growth of 3.6 per cent in Sub-Saharan Africa in the 2019-20 period. Africa’s foremost wealth is its population, the youngest globally, with a median age of 19.7 years compared to the global median age of 30.4 years. Fostering this growth and optimism is relative stability never experienced before.
Angola has maintained political stability since the end of the 27-year civil war in 2002, and experienced a peaceful transition from José Eduardo dos Santos to President João Lourenço, who won competitive elections in September 2017.
The new leader is spearheading critical reforms, tightening monetary policy, resuming fiscal consolidation and taking notable steps to reform public utilities, fuels prices, reduce subsidies, and privatise or liquidate some state-owned companies.
Although uncertainty around its 2019 elections casts a dark shadow over Nigeria’s stability, the IMF indicates that West Africa’s pivotal state is expected to see an expansion of 2.3 per cent, up from 1.9 per cent, in 2018. Similarly, Southern Africa’s regional powerhouse South Africa is expected to expand by 1.4 per cent.
Within Eastern Africa, Ethiopia and Rwanda are leading the pack with a projected growth of over 7.5 per cent. In the wake of the 2007/08 post-election violence, Kenya has made far-reaching reforms to underpin its sustained growth over the past decade.
Its devolved system of governance is providing new impetus to rural development. But weak accountability and slow public service delivery are serious drawbacks to grassroots development.
Moreover, political bickering is slowing down the implementation of President Uhuru Kenyatta’s “Big Four agenda” of housing, security, affordable healthcare and manufacturing, expected to spur growth, realise Vision 2030, Africa Agenda 2063 and the UN Sustainable Development Goals (SDGs) milestones.
Although Kenya’s healthcare system has faced challenges from the ongoing strike by nurses at the county level, devolved healthcare and free maternal health have greatly improved. The renewed global optimism and interest in Africa has spurred a new 21st century scramble for the continent’s natural resources and markets.
The challenge is how to turn this into prosperity for Africa’s poor. African countries need to fully exploit the preferential access to American markets created by the African Growth and Opportunity Act (AGOA), the cornerstone of US economic relations with Africa.
Since 2000, exports from AGOA countries to the United States have nearly tripled. AGOA has created some three hundred thousand jobs on the continent and another 1.3 million indirectly. But US-Africa trade relations remain under-developed compared to China.
Africa’s economic relations with China revolve around the triennial Forum on China-Africa Cooperation (FOCAC), formed in 2000. During the latest FOCAC Summit held in Beijing in September 2018, China devoted a total of $60 billion to support Africa’s growth over the next three years.
Coming on top of another $60 billion Beijing provided in 2015, China’s assistance includes $15 billion in grants, interest-free loans, and concessional loans; $20 billion in export credit lines; $10 billion for development financing; and $5 billion to support African exports to China. Africa’s least-developed countries stand to benefit from China’s debt relief scheme.
China’s support for Africa is an integral part of the Belt and Road Initiative (BRI), a broader strategy whose impact on the 2019 Legatum Prosperity Index needs to be evaluated.
After Brexit, the UK is strengthening ties with Africa’s leading economies. During her trip to South Africa, Nigeria and Kenya in 2018, Prime Minister Theresa May made a pledge of £4 billion in support for African economies to create jobs for young people.
According to the United Nations Conference on Trade and Development, UK direct investment in Africa in 2016 was £42.7 billion, compared to £44.3 billion from the US, £38 billion from France and £31 billion from China.
However, Africa’s growing debt remains a ticking time bomb. Its average debt to GDP ratio rose to 57 per cent in 2017 and has exceeded 100 per cent of the GDP of some countries.
Research by both the Thabo Mbeki High-Level Panel on Illicit Financial Flows from Africa and the Global Financial Integrity reveals a continent hemorrhaging from trade-related illicit financial flows. For Africa to rule the 21st century, it has to stem illicit financial flows.